THE EFFECT OF THE FRAUD HEXAGON ON FRAUDULENT FINANCIAL STATEMENTS: INSTITUTIONAL OWNERSHIP  AS A MODERATING VARIABLE

Angga Zikrul Akbar; Zulhelmy; Hidayat; Ahmad Zubair

doi:10.24252/assets.v16i2.67089

Authors

Angga Zikrul Akbar Universitas Islam Riau, Pekanbaru, Indonesia
Zulhelmy Universitas Islam Riau, Pekanbaru, Indonesia
Hidayat Universitas Islam Riau, Pekanbaru, Indonesia
Ahmad Zubair Universitas Islam Riau, Pekanbaru, Indonesia

DOI:

https://doi.org/10.24252/assets.v16i2.67089

Keywords:

Financial Statement Fraud, Fraud Hexagon, Institutional Ownership, Situational Action Theory

Abstract

Purpose - This study examines the effects of six Fraud Hexagon dimensions on financial statement fraud (FSF) and the moderating role of institutional ownership in Indonesian healthcare companies.

Method - Using a quantitative causal-comparative approach and purposive sampling, the study analyzed secondary data from 23 healthcare companies listed on the Indonesia Stock Exchange during 2022–2024 (69 firm-year observations). FSF was classified as a binary variable using the F-Score, and hypotheses were tested using binary logistic regression with interaction terms.

Findings - Stimulus, proxied by return on assets (ROA), collusion, and opportunity, proxied by board of directors’ outside membership (BDOUT), showed significant negative effects on FSF. Ego, auditor change, and director change were insignificant at the 5% level. Institutional ownership significantly moderated the relationships involving ROA, collusion, and BDOUT, but not those involving ego, auditor change, or director change.

Implications - Fraud Hexagon indicators do not uniformly increase fraud risk. Institutional ownership acts selectively rather than universally in mitigating fraud-related risks.

Originality - By integrating the Fraud Hexagon and institutional ownership in Indonesia’s healthcare sector, this study highlights the context-dependent relevance of ownership structures when assessing financial reporting fraud.

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